Protein tyrosine phosphorylation plays a crucial role in the regulation of cell proliferation. The positive signals for cell proliferation transmitted by protein tyrosine kinases (PTKases) must, however, be counterbalanced by the action of protein tyrosine phosphatases (PTPases). Given that hyperexpression or hyperactivity of PTKases causes tumors, it can be expected that the inactivation of PTPases may also result in uncontrolled cell growth. Recently, through molecular cloning a large number of PTPases were identified, suggesting diverse and specific functions for PTPases. Thus, it is apparent that much research is needed to understand the roles f PTPases in the eukaryotic signal transduction and cancer. There are two subfamilies of PTPases: receptor-PTPases and non-receptor cytosolic PTPases. In this proposal, we will study the general principles of the function of non-receptor PTPase in intracellular signal transduction using the yeast genetic system. Yeast is an ideal model organism to study the role of protein tyrosine phosphatases in eukaryotic signal transduction, because it is genetically tractable and its intracellular signaling pathways have many features in common with human cells. Yeast Saccharomyces cerevisiae has at least two non-receptor PTPases, PTP1 and PTP2. While both PTP1 and PTP2 are dispensable by themselves, PTP2 nevertheless serves an essential role in a yeast signal transduction pathway. Using a synthetic lethal screen, it was found that the combination of defects in PTP2 and a novel protein serine/threonine phosphatase PTC1 cause lethality. By the same screen, SHK, which encodes a yeast homolog of the prokaryotic sensor histidine kinases, was also found. The SHK1 histidine kinase probably is an environmental sensor that is involved in the PTP2/PTC1 signal transduction pathways. In order to study the molecular basis of the regulation of protein phosphorylation in yeast signal transduction, this project will genetically and biochemically characterize the functional roles of the PTP2 and PTC1 protein phosphatases, as well as the SHK1 protein kinase. Specific aims of this project are: 1)Identification of the genes that functionally interact with the PTP2 or PTC1 protein phosphatases by multicopy suppressor and extragenic suppressor screens; 2) Identification of physiological substrates of PTP2 tyrosine phosphatase; 3) Studies on the regulation of PTP2 tyrosine phosphatases by protein-protein interaction; 4) Studies on the mechanism of signal generation by SHK1 sensor histidine kinase; 5) Studies on the role of the PTC2 and PTC3 serine/threonine phosphatases in yeast signal transduction; and 6) Identification of the human homologs of novel PTC1 protein serine/threonine phosphatase.